Insurance firms buffeted by strong economic headwinds

The insurance industry has nowhere to go but up

Ukraine’s life insurance market is still in its infancy, with less than 5 percent of the population buying such policies – very low by Western standards. The low rates may be rooted in a general lack of trust among Ukrainians in financial institutions and in cultural attitudes that are more accepting of risk.

So the industry has had almost nowhere to go but up, which is exactly the direction it has gone in recent years, spurred on by a booming economy. Insurers enjoyed 70 percent annual growth rates in recent years, said Oksana Golenshyna, chairman of Ukrainian insurance group Life.

While the spreading global financial hurricane has snarled the market in the near-term, optimism remains for long-term growth prospects.

According to the State Commission on Financial Market Regulation, the life insurance business is still miniscule, but it has grown three-fold in the past seven years.

In 2001, there were only 24 life insurance companies in Ukraine. Today, there are more than 70 companies.

The insurance sector in Ukraine has a symbiotic relationship with commercial banks. The lion’s share of domestic companies’ portfolios is mortgage insurance policies on a borrower’s life, Golenshyna said.

When the credit crunch started to hit the country in May and banks tightened lending to a trickle, the revenue from easy premiums dried up.

Still, with several years of fast growth under their belts, the life insurance business is looking ahead past the world financial crisis and pending economic slowdown. They see lots of sharp growth as experienced in recent years still ahead.

From 2006 to 2007, the amount of premiums collected by life insurers more than doubled from $64 million to almost $157 million.

“Some of the younger companies’ portfolios are about 90 percent bank loan policies, because this is the first product line companies entering the market tap into,” Golenshyna said.

Mature companies were not immune to the impact, despite having somewhat more diversified portfolios. They, too, are heavily reliant on government mandated loan insurance policies.

“In our company, a borrowers’ life insurance is about 60 percent of the total amount of payments,” Golenshyna said. Meanwhile, classic life insurance products, such as retirement insurance, are slowly catching on with the public.

“Most Ukrainians still don’t see the value of insurance, but the trends are positive,” Golenshyna said.

“The industry is young. At this stage, companies are only collecting premiums, and there is suspicion among a population where people have not seen policies pay out. When the public starts the see the payouts, they will begin to trust the industry,” she added.

The country’s ongoing political soap opera is among the trouble spots on the horizon. The chaos might frighten off potential international insurance companies. According to industry statistics, foreign capital makes up less than 26 percent of the insurance market.

“From my observations, I can tell that many foreign investors are looking to establish their life insurance business in Ukraine or to buy a local insurer,” said Ludmyla Kosar, an insurance consultant.

“But by their very nature, insurance companies also seek to reduce risk as much as possible.”

“Coupled with Ukrainian disinterest in life insurance, the political situation could make potential investors turn to more stable countries,” Kosar added. “Ukraine’s leaders need to stop their squabbling.”

Source:http://www.kyivpost.com/business

Insure.com: No Better Time to Buy Life Insurance to Protect Your Family Financially

DARIEN, today announced that term life insurance rates have again fallen to all-time lows. Insure.com tracks the rates of 35 leading life insurance companies and provides an instant quote service for consumers.
Despite widespread turmoil in the financial services markets, life insurance buyers can be confident that they are still getting lower-than-ever rates. In fact, there's no better time than now to protect your family financially through life insurance protection.

"We are still seeing term life premiums being driven down by competition in the marketplace," said Phil Young, Market Reporter for Insure.com. In the last several months, several highly rated companies such as Transamerica, Genworth and Savings Bank Life of Massachusetts have effected rate reductions. In addition to lowered prices, some companies now also offer forgiving rates for certain health problems, and you have a mix that makes for some of the best opportunities in history for life insurance shoppers."

When buying life insurance, consumers are cautioned to pay close attention to the financial stability ratings. "Life insurers are closely watched by state regulators, who monitor their ability to pay claims," said Amy Danise, Editor of Insure.com. "Consumers who receive price quotes from high-rated companies can buy with confidence because the current system of state regulation of life insurers is working well."
Insure.com gives you instant quotes from up to 35 leading life insurance companies and includes the latest financial stability ratings from A.M. Best, Fitch, Moody's, Standard & Poor's and TheStreet.com with every life insurance illustration. Life insurance shoppers wanting free quotes or advice based upon their own criteria can call 1-800-556-9393 or visit http://www.insure.com.

Most common health conditions among life insurance buyers
All-time low term life insurance rates are available not just to healthy applicants but also to buyers with common health conditions. Insure.com research reveals that the most common health conditions among life insurance shoppers are:
-- Cholesterol. Almost every life insurer we track allows their best rates even if you receive treatment for elevated cholesterol, so long as your HDL ratio and total cholesterol levels are within range of their limits.
-- Blood Pressure. Today, many leading companies won't exclude you from preferred rates solely for having blood pressure that requires treatment, but they will require evidence of good, stable control and you must meet their systolic and diastolic blood pressure limits.

-- Height/Weight Ratio. Allowable maximum weight for a 6' male wanting to pay the lowest possible life insurance rates are a reasonable 207 pounds with Savings Bank Life of Massachusetts. If you take that weight up, say, to 215 pounds, expect to pay about 1/3 more.

Source:http://www.marketwatch.com/newsi

Newcomers to life insurance trim costs to break even faster

New Delhi: Unlike existing life insurers, who have failed to break even even after being in business for eight years, new entrants say they are confident of making profits within seven years by trimming costs from the get-go. In 2008 alone, four life insurers started operations in India: IDBI Fortis Life Insurance Co. Ltd, Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd, Aegon Religare Life Insurance Co. Ltd and Future Generali India Life Insurance Co. Ltd. (LOWER COSTS QUICKER GAINS) A comparison of cost structure of these four firms shows a focus on lower allocation and distribution costs. In India, expenses for both a life insurer and the insured are front-loaded, with a big chunk of premium in the first year going as allocation charges towards writing off distribution costs such as an agent’s commission.

“Low premium allocation charges is the beginning of a new trend among new entrants. Even if their distribution commissions are low but services and products are good, low commissions can never be a hindrance to sell the product,” said Rajiv Deep Bajaj, chairman of Bajaj Capital Ltd, a New Delhi-based financial services provider. “We are looking forward to break even within seven years of our operation,” said Amish Tripathi, national head of marketing and product management, IDBI Fortis. “The allocation charges of our Wealthsurance plan, a unit-linked insurance plan, or Ulip, is kept as low as 3.5%. Low charges makes the policy more saleable and you don’t need to pay distributors such a high commission to sell the policy, and therefore control your cost too.” This differentiated approach spells benefits to policy holders too, who can invest more. Some of the existing policies have allocation charges as high as 60%. This means out of every Rs100, only Rs40 is invested, in the first year of the policy.

Aegon Religare also announced that all its branches will break even within three years of their operation so that soaring sales do not impact their profitability. “The company as a whole will break even within seven years of its operation but all our branches will break even within three years,” said Rajiv Jamkhedhar, CEO of Aegon Religare. To keep costs low, Future Generali started the concept of mall assurance, an initiative to sell insurance policies at malls, resulting in low distribution costs. Fresh business, or first-year premiums, in the sector as a whole grew by 23.31% to Rs92,989 crore in 2007-08 from a year ago. In the two preceding fiscals, business had grown even faster at 94.96% and 47.94%, respectively, according to a report by the Insurance Regulatory and Development Authority.

Other life insurers have not been able to break even yet, except SBI Life Insurance Co. Ltd and Shriram Life Insurance Co. Ltd, because of soaring policy sales. The high growth rate is forcing insurers to dig deeper into their pockets to boost capital so they can cover related costs and underwriting risk, delaying their payback period.

news source : http://www.livemint.com/

Birla Sun Life to pump in Rs 1,300 crore, looks to rank among top three by ’10

MUMBAI: Having regained its position as one of the top five life insurance companies, Birla Sun Life Insurance has lined up Rs 1,300 crore of investment into the company. The company has been the fastest growing life insurer in the current fiscal, with a 187% growth in new business during the first quarter.

Speaking to ET, Birla Sun Life Insurance president and CEO Vikram Mehmi said that the company would start publishing its valuation numbers from next year which would give an idea of how much the company is worth.

The company has set for itself a target of being among the top three by 2010, by which time it is also expected to break-even. “We are already among the top three if you see the premium in terms of individual business,” said Mr Mehmi.

The company’s assets under management stand at Rs 6,800 crore and is expected to cross Rs 10,000 crore by the end of the current fiscal. “Our current aim is to maintain our momentum and grow faster than the market and get to the top three slot as early as possible,” he said. The company has managed to grow because of a renewed thrust in distribution which resulted in an almost three-fold growth in branch network to 600 branches and a doubling of the agency force to close to two lakh agents.

“We are not worried about the equity market because we see this downtrend as a short-term thing. Also, there is so much under insurance and under penetration, there is a huge opportunity to grow,” said Mr Mehmi. According to data released by the insurance regulator, Birla Sun Life has seen its new business premium grow from Rs 174 crore in the first quarter last year to Rs 501 crore in the first quarter of the current fiscal.

Close to half the premium in the current fiscal has come in June 2008, which saw premium collections top Rs 241 crore. This has given the company an overall market share of 3.5% in the life insurance industry. Along with growing its agency force, the company is also taking measures to ensure that the productivity of this channel remains high. “Our most important parameter is how early the agent gets activated. We have a multi-pronged strategy for training agents, which includes tying up with schools and bringing in senior advisors to train new agents,” said Mr Mehmi. He added that the company’s premium income was sustainable considering that less than 1% of new business came from single-premium policies and group insurance was limited to 8-10% of total premium.

news source : http://economictimes.indiatimes.com/

Life insurance key part of plan

Most financial experts would argue that, for a typical Canadian family, a comprehensive financial plan should include some degree of life-insurance coverage, either through group plans at work or individual policies. But how much is appropriate for an individual, and how assured is the benefit? The Gazette addressed these and other questions to Frank Swedlove, president of the Canadian Life and Health InsuranceAssociation. Here are his responses.

Q: When should people consider life insurance?

A: It depends on an individual's circumstances. Obvious times to consider it are when you assume new financial obligations like a mortgage or need to provide income security for dependents such as a spouse or children.

In later life, it can be used to create a significant charitable gift, pay taxes on death or for more complex estate planning purposes. Any time you need to create, or preserve, financial value, life insurance can be a very cost-effective option. And like most financial arrangements that rely on investment growth, time can be on your side if you start early. You should also keep in mind that the price you will pay for life insurance reflects your medical history. Life insurers review that history when you apply for your policy, but can't ask for new medical evidence later on, unless you request certain changes to the policy. provide "guaranteed purchase" options, which will allow you to purchase additional coverage at specified intervals, without new medical evidence.

Q: What are the main types of life insurance and their distinctive features?

A: Most people think of three main types: term life, whole life and universal life.

Term insurance is intended to provide coverage for a period of temporary need. It is relatively inexpensive, so it is often the best way to maximize coverage for people on a tight budget. Premiums can be the same throughout the period you own the policy, or increase at five or 10-year intervals. It typically has no savings value, which means the premiums in later years can actually be higher than if you had originally bought whole life or universal life insurance.

Whole life is what your parents probably bought - permanent coverage with a level premium that includes a savings portion. This cash value can be paid out to you if you decide you no longer need coverage, although it may be partially taxable. "Participating" whole-life policies pay annual dividends that can be used to pay premiums, increase coverage, held on deposit earning interest, or paid out to you. You can also typically take a loan against the cash value and the value of any dividends held in the policy, or use the policy as collateral for a loan.

Universal life is more flexible, bridging the difference between whole life and term and separating the cost of coverage each year from the contributions to the investment portion of the policy. These policies typically have several investment options you can mix and match. Life-insurance companies also provide group-life insurance through employers, unions or even clubs or associations to which you may belong.

news source : http://www.canada.com/

Life insurance may cost more

SAGICOR POLICY HOLDERS may pay more for new life insurance coverage come next year due to the 2008 Budget imposition of a one per cent increase in insurance premium tax. The good news is the company is likely to absorb that cost in its general insurance line of business. In a statement to BARBADOS BUSINESS AUTHORITY last Friday evening, Sagicor Life Inc. chief financial officer Anthony Chandler said: "The recent Budget proposal for an increase in premium tax will result in an additional tax burden to life insurance companies writing premiums in Barbados.

"The premium tax increase is likely to result in an increase in insurance premiums to the consumer for new policies sold after the tax comes into effect." Prime Minister David Thompson has proposed an increase in insurance premium tax from January 1, 2009, that would raise $6.6 million for the year. Insurance companies would also pay a $20 000 yearly licence fee, up from $5 000, but Sagicor General Insurance Inc. chief executive officer David Deane said that "increased premium tax and increased licensed fees might not be punitive in themselves. . . . "I don't think that will cause companies to automatically say we will increase general insurance premiums."

"Life insurance policies sell long-term contracts; you contract for a premium which you expect to pay for a lifetime and the opportunity to change premiums does not really exist. "You have the ability to price new contracts appropriately and they can reflect the additional taxes," he said. Chandler emphasised that industry stakeholders needed full interpretation of legislation that would impose

news source : http://www.nationnews.com/

Hasa supports health insurance plans

The Hospital Association of SA on Thursday welcomed government's initiative to establish a National Health Insurance (NHI) system to provide health care cover for all South Africans. This proposal was put to Cabinet on Wednesday by Health Minister Manto Tshabalala-Msimang. "The private hospital sector fully supports the concept of a National Health Insurance," said HASA board member Biren Valodia in a statement.

"We believe that universal health cover for all South Africans, if properly designed and implemented, is one of the measures that can help increase affordability and access to health care in this country." Valodia attended the Board of Healthcare Funders (BHF) annual conference in Durban this week, where the NHI proposal was discussed and supported. He said the private hospital sector had a positive contribution to make, and looked forward to engaging the government and other health care stakeholders in this process.

However, Valodia reiterated the association's opposition to a draft legislation imposing a process of price regulation on the private health-care sector. He said HASA had not changed their view that the process set out in the draft National Health Amendment Bill amounted to price regulation and that the legislation be withdrawn. "The bill would result in the National Health Reference Price List, currently a recommended price guide, becoming the mandatory default price in the event that negotiations between hospitals and funders reach a stalemate. This is price regulation." The private hospital sector remained disappointed at the level of consultation and negotiation over the draft health legislation,

news source : http://www.int.iol.co.za/